Pluspetrol's Rights Upheld in a Venezuelan Joint Venture
September 12, 2016
Cleary Gottlieb secured a preliminary injunction for Petroandina Resources Corporation N.V., a subsidiary of client Pluspetrol Resources Corporation, upholding Petroandina’s rights under a shareholders agreement that it entered into with defendants Harvest Natural Resources, Inc. and HNR Energia B.V., to pursue a joint oil and gas venture in Venezuela.
Petroandina entered into the shareholders’ agreement with Harvest when it purchased a minority stake in the Venezuelan joint venture in 2013. The agreement bars Harvest from transferring its majority equity stake in the joint venture, except in certain limited circumstances, and also guarantees Petroandina certain exit rights, depending on the circumstances of the proposed sale. However, in June 2016, Harvest publicly announced that it had entered into a share purchase agreement to sell Harvest’s majority interest in the joint venture on terms that breached the transfer restrictions in the shareholders’ agreement. Cleary filed an emergency motion for a preliminary injunction in the Delaware Court of Chancery on behalf of Petroandina, asking the court to block the proposed deal.
On August 16, 2016, Vice Chancellor J. Travis Laster granted Petroandina’s motion in full. The court noted that the shareholders’ agreement was unambiguous and that Harvest’s proposed transaction “[did] not comply with the plain language” of that agreement. The court also found that Harvest’s reading of the contract was “so contrary to the plain language of [the agreement] as to be facially frivolous.”
Cleary previously succeeded on a similar motion for preliminary injunctive relief against Harvest on behalf of Petroandina in January 2015. The 2015 injunction barred Harvest and its affiliates from filing an arbitration against the Government of Venezuela in violation of Petroandina’s rights under different provisions of the same shareholders’ agreement.